AMC Theaters ink deal to help it survive pandemic

Investors will pump $300 million of new money into the movie chain

AMC Entertainment Holdings Inc. has reached a deal with investors who will pump $300 million of new money into the company, as the nation's largest theater chain looks to restart its business and fill seats with moviegoers still wary of the coronavirus pandemic.

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Under the terms of the deal, AMC's junior bondholders, who are owed $1.6 billion, will swap their debt at a discount -- about 73 cents on the dollar -- for new debt. Some of those investors will lend AMC $200 million, the company said in a regulatory filing Friday.

TickerSecurityLastChangeChange %
AMCAMC ENTERTAINMENT HOLDINGS INC4.75+0.61+14.73%

Meanwhile, private-equity firm Silver Lake Group LLC, which has a representative on the company's board and holds $600 million of its convertible bonds, would swap its holdings into first-lien debt. Silver Lake has also agreed to provide a $100 million senior loan.

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AMC has already entered into written agreements with Silver Lake as well as investors holding roughly $1.6 billion, or 70 percent of the company's $2.3 billion of junior bonds. The company will aim to get investors who hold the remaining 30 percent of junior bonds to participate in the deal as well.

The agreement will slash as much as $630 million in debt from AMC's books as the chain moves to reopen its theaters and to recuperate from the coronavirus pandemic. The Wall Street Journal reported Tuesday that AMC was nearing a deal supported by bondholders and Silver Lake.

Before reaching the agreement with the bondholders and Silver Lake, AMC had reviewed a counterproposal made by senior lenders including Apollo Global Management Inc., Davidson Kempner Capital Management LP and Ares Management Corp. However, both Silver Lake and the bondholder group rejected the senior lender group's proposal, according to people familiar with the matter.

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AMC has been a potential bankruptcy candidate ever since the pandemic caused the company to shut its theaters, numbering more than 1,000 world-wide, and furlough workers. Already heavily leveraged before the pandemic, the chain has been without revenue for months. It hired law firm Weil, Gotshal & Manges LLP, a bankruptcy powerhouse, and financial adviser Moelis & Co. for advice on weathering the outbreak.

Movie theaters have largely stayed shut even as states loosen social-distancing rules at restaurants and other venues because of the challenges of packing large numbers of people into indoor auditoriums. The three biggest chains -- AMC, Cineworld Group PLC's Regal Entertainment Group and Cinemark Holdings Inc. -- have decided to stay closed until they have new movies to show.

TickerSecurityLastChangeChange %
CNKCINEMARK HOLDINGS11.06+0.56+5.33%
IMAXIMAX11.86+0.38+3.31%

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AMC was forced to delay plans to reopen the bulk of its U.S. locations until July 30, following date changes for the releases of two major films.

Even after state and local governments allow AMC and other cinema operators to reopen all theaters, it is likely that attendance could be slow to recover to full capacity as people remain cautious about being in shared public spaces, particularly indoors.

At the same time, large numbers of Americans seem to be unconcerned about flouting social-distancing guidelines and happy to join crowds. AMC's prospects as it reopens its cinemas rests in part as to whether enough of the second group of people are movie enthusiasts.

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For now, all eyes are on reopening plans and progress containing the coronavirus. Without new, high-profile movies from Hollywood studios, AMC and its rivals don't have product capable of wooing moviegoers. Twice AT&T Inc.'s Warner Bros. and Walt Disney Co. delayed showing two of the summer's most-anticipated titles as the pandemic persisted.

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AMC hopes to begin opening its U.S. theaters at the end of this month, in time for Warner Bros.' "Tenet" -- directed by Christopher Nolan, one of Hollywood's biggest box-office draws -- and Disney's remake of "Mulan." Both movies are slated for an August release.